Pressure on Manafort Grows as Feds Track More Income, Possible Money Laundering

By Peter Stone, McClatchy DC

24 August 17

 

aul Manafort’s place in the crosshairs of Special Counsel Robert Mueller’s probe into the Kremlin’s attempts to sway the 2016 presidential election seems to be growing more uncomfortable.

Two sources familiar with the inquiry tell McClatchy that investigators are working to confirm information indicating that Manafort and the consulting firms he led earned between $80 million and $100 million over a decade from pro-Moscow Ukrainian and Russian clients.

Mueller’s expanded focus on Manafort’s complicated financial picture is zeroing in on whether he may have evaded taxes or engaged in any money laundering schemes, the sources say, and the hunt for his financial records through a labyrinth of offshore bank and business accounts has become an important prong of the investigation.

Overall, the probe centers on whether anyone on Donald Trump’s campaign, or other Trump associates, assisted Moscow’s election meddling. Russia’s cyber mischief last year was designed to help the real estate mogul win in November.

But Mueller’s team may also pursue “any matters” that are found in the course of the probe.

Manafort, who chaired the Trump campaign for three months in mid-2016 and earlier spent two months coordinating the search for pro-Trump delegates, is a prime target as investigators attempt to win the cooperation of key members of the campaign’s inner circle, said the sources, who spoke on condition of anonymity because the inquiry is confidential.

Given his pro-Kremlin connections and his closeness to the campaign, Manafort was uniquely positioned to play a role in any collusion between the campaign and operatives working on behalf of the Russian government to help elect Trump.

Whether Manafort can be squeezed depends in part on whether he failed to report foreign income and overseas bank accounts annually to the Internal Revenue Service as required by law. The volume of money said to be involved and the time elapsed could put him at significant risk.

“If Manafort is shown to have violated the tax laws and the disclosure laws in connection with his foreign income, then he may be facing substantial jail time and large fines,” said Jennifer Rodgers, a former federal prosecutor and the executive director of Columbia Law School’s Center for the Advancement of Public Integrity. If the violations are willful, the penalties go up.

That’s the sort of pressure that could cause Manafort to cut a deal with Mueller under which he might receive leniency in return for divulging what contact he and other Trump aides had with Russian officials and operatives during 2016.

"Based on my experience with prosecutors, it would be typical that they're getting financial information to pressure Manafort to cooperate in a bigger case,” said former Justice Department prosecutor Barak Cohen, who is now a lawyer at Perkins Coie in Washington.

There has been no indication to date that Manafort is spilling the beans to the feds.

But clearly the heat is on. Last month, although many Manafort bank and business records previously had been subpoenaed, FBI agents raided his home in Alexandria, Va. seeking more details of his finances and turning up the heat.

In order to conduct the raid, prosecutors had to obtain a search warrant by showing a judge probable cause that criminal evidence would be found at the house. Cohen noted that the special counsel’s office could have used a grand jury subpoena or tried to obtain the records from Manafort’s lawyer; the use of a search warrant signals prosecutors were concerned evidence might be destroyed.

This month Bloomberg reported that Mueller has recently used a Washington grand jury to send subpoenas to some international banks for records about Manafort accounts and transactions. Earlier this year, subpoenas were issued for other Manafort bank and mortgage records in the U.S. including some relating to millions of dollars in mortgages and loans Manafort received after he abruptly left the Trump campaign in August. Other Justice Department this year also obtained records for about 25 foreign bank accounts and businesses that Manafort used in Cyprus, a popular money haven for Russian oligarchs.

Besides looking for hidden income and accounts, much of this activity is part of an effort to document signs that Manafort may have been involved in money laundering. People knowledgeable about the probe say investigators are looking intently at whether any of the millions he received from oligarchs and politicians came from corrupt sources, as well as his purchase almost a decade ago of three homes in New York and Florida – including a $3.7 million condo in Trump Tower -- for almost $8 million in cash.

“The biggest problem that Mr. Manafort faces is that these transactions, taken as a whole, are suggestive of either money laundering or tax evasion or both,” said Washington attorney Ross Delston, who is a money laundering expert. “Mr. Manafort’s multimillion-dollar real estate transactions present a target rich environment for any law enforcement probe.”

Money-laundering charges, of course, would very possibly heighten Manafort’s interest in flipping and cooperating with investigators.

"Anyone facing serious charges for money laundering and tax offenses involving undisclosed foreign bank accounts would have huge incentives to trade cooperation for prison time," said Jonathan Winer, who was the State Department’s top money laundering expert during the Clinton administration.

The growing legal pressure Manafort faces was underscored further when the once high-flying foreign consultant abruptly switched attorneys not long after his home was raided, hiring Kevin Downing, a partner at Miller & Chevalier. Downing’s expertise is in tax and money laundering issues; he previously handled such cases in a senior position at the Justice Department.

“Mueller has added individuals with international tax expertise and Mr. Manafort is adjusting his legal team accordingly,” said Jason Maloni, a spokesman for Manafort.

Maloni told McClatchy earlier this year that Manafort’s many accounts in Cyprus were set up “at the request of clients and that no actual legal authority in Cyprus has ever directly accused Mr. Manafort of wrongdoing, nor have U.S.authorities.”

Maloni has declined to address questions about whether Manafort had filed complete yearly taxes and disclosed all his offshore accounts. He reiterated that Manafort “looks forward to meeting with those conducting serious investigations of these issues to discuss the facts.”

Mueller’s team is also scrutinizing Manafort’s participation in the June 2016 Trump Tower meeting attended by Donald Trump Jr., the president’s son in law Jared Kushner and a Russian lawyer with ties to the Kremlin. The meeting was set up initially to pass along dirt on Hillary Clinton from the Russian government to the Trump campaign, according to published emails.

(Manafort and Kushner separately — and at roughly the same time — alerted Senate Intelligence Committee investigators to the meeting in documents they provided the committee, according to a person familiar with the matter.)

What’s more, government investigators are looking at information they’ve received concerning “talks between Russians about using Manafort as part of their broad influence operations during the elections,” a source familiar with the matter told McClatchy.

The New York Times first reported earlier this year that the investigators had obtained intercepts of Russian intelligence and other officials discussing the possibility of using Manafort in an effort to influence Trump’s views.

“If there ever was any effort by Russians to influence me, I was unaware, and they would have failed,” Manafort told the Times in a statement. “I did not collude with the Russians to influence the elections.”

Four U.S. intelligence agencies have concluded that the Kremlin in 2016 sponsored a massive cyber operation aimed at helping Trump win by hacking into computers used by the Democratic National Committee and Clinton campaign official John Podesta, plus orchestrating fake news and critical stories to weaken Clinton.

Manafort made a fortune working in Ukraine from 2004 to 2015 for a mix of pro-Moscow Ukrainian oligarchs and political figures, most notably ex-president Viktor Yanukovych, who was ousted and fled to Moscow in early 2014, and Russian oligarch Oleg Deripaska, a billionaire with good ties to Vladimir Putin. Manafort had a $10 million a year contract to provide business and political advice to Deripaska that was signed in 2006 and ran for a few years, according to the Associated Press.

Manafort also had longstanding business dealings with pro-Moscow steel mogul Rinat Akhmetov, Ukraine’s richest man and Manafort’s first client in the country. Manafort also had old ties with Dmytro Firtash, who made billions in energy deals with Russia; U.S authorities are trying to extradite him on separate corruption charges. Firtash is known to have organized crime links.

Most of the payments to Manafort did not have to be and were not disclosed to the public. This year, however, after inquiries from the Foreign Agents Registration Unit at Justice, Manafort filed a late registration as required by law for lobbying and consulting work he did from 2012 -2014 in Ukraine and Washington for Yanukovych’s Party of Regions. Manafort’s FARA registration showed that his firm received over $17 million from the Party of Regions which historically was underwritten heavily by Firtash and Akhmetov, according to two sources familiar with the payments.

Manafort’s sudden departure from the campaign last August 19 came after a New York Times story about a “secret ledger” in Ukraine disclosing that he had received $12.7 million in off the books payments from Ukraine’s Party of Regions for a five year period, a charge that Manafort has flatly denied.